Israel: New Israeli Regulations Regarding Exemptions From The Licensing Requirement For Credit Activities

Last Updated: 29 January 2019
Article by Shiri Shaham

On October 3, 2018 new regulations were published, setting forth various exemptions from the licensing requirement for extension of credit. The name of the regulations: Regulations for Supervision of Financial Services (Regulated Financial Services) (Exemption from the Licensing Requirement) (Temporary Order) – 2018 (the "Exemption Regulations").


As of June 1, 2017 an entity engaging in extension of credit in Israel is subject to a licensing requirement under the Supervision of Financial Services Law (Regulated Financial Services) – 2016 ("the Law"). The Law is part of a major up and coming legislative process, the declared objectives of which are to provide comprehensive regulation in the field of financial services provided by non-institutional bodies, develop the non-institutional financial services sector in Israel and increase the competition in the financial services field by establishing an alternative to the banking system in Israel.

"Extension of Credit" is defined very broadly in the Law – "engaging, by way of business, in credit extension, including granting a credit line, inter alia, in one of the following: (1) cheques, promissory notes, or other bills of exchange discounting; (2) extending credit against an assignment of the debtor's right to receive Financial Assets from others, including "discounting Services"; (3) extending credit while financing a purchase or a lease of property or service (above ILS 30,000 to a single client); (4) granting a guaranty for liability of other; (5) extending a "non-recourse" credit, secured by an asset, without an entitlement to reimbursement from the debtor in case of a default."

The Exemption Regulations were promulgated under the authority granted in the Law to the Minister of Finance to determine various exemptions from the licensing requirement.

The regulator in charge of the Law is the Capital Markets, Insurance and Saving Authority at the Ministry of Finance (the "regulator").

The Main Exemptions under the Exemption Regulations

The main exemptions which may be applicable to foreign financial institutions are:

  1. A corporate entity: (i) incorporated in a country which is a member in OECD; (ii) which holds a banking license from a regulatory body in an OECD country; which is subject to Anti Money Laundering ("AML") obligations in such country; and which is not subject to the licensing requirements under the Israeli Banking (Licensing) Law – 1981.
  2. A corporate entity: (i) controlled by, or under the same control as, a corporation set forth in sub-section (1); (ii) its credit extension activity is subject to supervision in an OECD country; (iii) is subject to AML obligations in such country; (iv) it does not provide in Israel credits to consumers.1
  3. A corporate entity: (i) incorporated in an OECD country; (ii) which holds an insurance license from a regulatory body in an OECD country; (iii) is subject AML obligations in such country; (iii) its credit extension activity is subject to supervision in an OECD country; (iv) is subject to AML obligations in such country; and (v) it does not provide in Israel credits to consumers.
  4. A corporate entity: (i) incorporated in an OECD country; (ii) which its main business is the provision of securities trading services, for others or for its own account; (iii) is subject to supervision in an OECD country; and (iv) it is permitted to extend credit in connection with such trading activity.
  5. A corporate entity engaging in extension of credit solely to business corporations, where the amount of any single credit transactions is not less than ILS 3 million.
  6. Venture credit - engaging in extension of credit solely to companies, whose main business is R&D or manufacturing of novel high tech products or process, where the investment in such a company is a high risk investment in comparison to other investments.

The Exemption Regulations will remain in force at this stage until December 31, 2019, when the regulator will consider to extend or to amend them.

The Territorial Applicability of the Law – Credit Extended outside of Israel

Foreign financial institutions may rely on the exemptions detailed above, but they may also rely on the interpretation adopted by the regulator as to territorial applicability of the Law, namely, in which circumstances a credit transaction with an Israeli borrower will be considered as occurring outside of Israel and, therefore, outside of the scope of the Law.

According to a Position Paper published on January 1, 2018 the regulator expressed its position that credit extension activity undertaken by a foreign entity fully outside of Israel – is not within the territorial scope of the Law and therefore does not trigger the licensing requirement thereunder, provided, that all the following conditions are met: (i) the credit documentation (excluding regarding security interests) is not in Hebrew, is executed outside of Israel and its governing law provision does not adopt the Israeli laws; (ii) the accounts of the borrower into which the credit is extended are held in financial institutions located outside of Israel; (iii) the foreign entity does not contact new clients in Israel; and (iv) no physical meetings are conducted in Israel between the foreign entity and its clients.


1 Credit to consumers – where the use of the credit is primarily for personal, domestic or family needs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions